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United Transportation Union v. South Carolina Public Railway Commission, 130 F.3d 627, 4th Cir. (1997)
United Transportation Union v. South Carolina Public Railway Commission, 130 F.3d 627, 4th Cir. (1997)
3d 627
156 L.R.R.M. (BNA) 3065, 35 Lab.Cas. P 10,116
Under the Railway Labor Act (RLA), 45 U.S.C. 151-188, federal district
courts have subject-matter jurisdiction over "major disputes" in railway labor
relations, but lack jurisdiction over "minor disputes." See Consolidated Rail
Corp. v. Railway Labor Executives' Ass'n, 491 U.S. 299, 303-04, 109 S.Ct.
2477, 2480-81, 105 L.Ed.2d 250 (1989). Instead, minor disputes are subject to
mandatory arbitration before the National Railroad Adjustment Board. See id.
See also 45 U.S.C. 153. Generally, when a party to a labor dispute is seeking
to create contractual rights, the dispute is a major dispute; however, if the
parties are merely seeking to enforce contractual rights, the dispute is minor.
See Consolidated Rail, 491 U.S. at 302, 109 S.Ct. at 2479.
2
I.
A.
3
Collective bargaining in the railroad industry, on both the national and local
levels, is covered by the RLA, 45 U.S.C. 151-188. In Detroit & Toledo Shore
Line R.R. v. United Transp. Union, 396 U.S. 142, 90 S.Ct. 294, 24 L.Ed.2d 325
(1969), the Supreme Court explained the objectives of the RLA:
Section 6 requires employers and unions to give the other party a 30-day notice
of proposed changes in agreements affecting rates of pay, rules, or working
conditions. See id. The filing of a Section 6 notice commences a period of
mandatory negotiation, during which the existing rates of pay, rules and
working conditions generally may not be altered until the controversy is
resolved. See id. If the parties cannot agree between themselves, the
negotiations then go to mediation, usually under the auspices of the National
Mediation Board. See 45 U.S.C. 155. Sometimes, it becomes necessary for
the President to appoint an Emergency Board to make a report and
recommendations to resolve the dispute. See 45 U.S.C. 160. See also Detroit
& Toledo Shore Line, 396 U.S. at 145, 150-51, 90 S.Ct. at 296, 299-300.
In summary, neither party may change the status quo with respect to existing
agreements without first filing a Section 6 notice, and must maintain the status
quo until the collective bargaining process is complete. See Detroit & Toledo
Shore Line, 396 U.S. at 150, 90 S.Ct. at 299. The goal of this scheme is to
prevent the unilateral imposition of new contractual terms. See Consolidated
Rail, 491 U.S. at 306, 109 S.Ct. at 2482. It "delay[s] the time when the parties
can resort to self-help[,] provides time for tempers to cool, helps create an
atmosphere in which rational bargaining can occur, and permits the forces of
public opinion to be mobilized in favor of a settlement without a strike or
lockout." Detroit & Toledo Shore Line, 396 U.S. at 150, 90 S.Ct. at 299.
B.
10
11
(J.A. 25-26).
16
The two national agreements which Articles 1(a) and 34(a) incorporate had
been previously negotiated and were in force at the time the 1973 Agreement
was enacted. However, in January 1977, August 1977, February 1981, and July
1988, the Union triggered new rounds of national handling by serving Section
6 notices on "practically all railroads in the United States," which notices
expressed a desire to change existing agreements. (See J.A. 28-31). In each
instance, the Railway Commission chose not to participate in the national
handling. Instead, the Railway Commission and the Union enacted local
"standby agreements" that adopted the terms of the national agreements when
they were finalized. 1 All these standby agreements are essentially identical in
wording, and provide in their entirety:
17 accordance with provisions of the Railway Labor Act, as amended, a notice was
In
served under date of [date differed for each standby agreement], on practically all
rail-roads in the United States, including [the South Carolina Public Railway
Commission], by the accredited representative of employees of such railroads who
are represented by the United Transportation Union, of a desire to change existing
agreements as set forth in an attachment made part of the aforesaid notice.
18 management of [the South Carolina Public Railway Commission] has not
The
authorized and will not authorize any of the conference committees selected by the
railroads to represent it in the handling of these matters. Therefore, it is hereby
agreed between the SC Public Railways Comm. Railroad and the accredited
representative of the employees involved, signatories hereto, that any settlement or
disposition of these matters reached through national handling shall be adopted and
applied by the said SC Public Railways Comm. Railroad and the employees
involved in the same manner and made effective as of the same date as it is adopted
and applied on the railroads, parties to such national handling.
19
(J.A. 31) (emphasis added). In each case, when the Union served its Section 6
notices on the Railway Commission regarding the national handling, the Union
enclosed a proposed standby agreement.
20
21
On May 8, 1996, a new national agreement was finalized. As in the case of all
previous national handling, the Railway Commission was not a party to the
national agreement. In a letter dated May 22, 1996, the Union requested that,
pursuant to Articles 1(a) and 34(a) of the 1973 Agreement, the Railway
Commission implement the rates of pay, lump-sum payments and health and
welfare benefits contained in the 1996 national agreement. On June 11, 1996,
the Railway Commission responded that the existing rates of pay would remain
unchanged. The Railway Commission stated that its 1995 Section 6 notice
served notice upon the Union that the compensation elements were to be
negotiated, and that the Railway Commission had not agreed to be bound by
In the district court, the Union moved for a preliminary status quo injunction
against the Railway Commission, and the Railway Commission moved to
dismiss. The Railway Commission argued that the dispute was a "minor
dispute" under the RLA and subject to mandatory arbitration. Accordingly, the
Railway Commission argued that the district court lacked subject-matter
jurisdiction to hear the dispute. See Consolidated Rail, 491 U.S. at 303-04, 109
S.Ct. at 2480-81.
23
In considering the parties' motions, the district court assessed whether the
dispute was a "major dispute" or "minor dispute" under the RLA. The district
court rejected the Railway Commission's suggestion that the parties' "past
practice" of entering into standby agreements was evidence that the 1973
Agreement was not intended to incorporate the terms of all future national
agreements. Instead, the district court found the 1973 Agreement to
unambiguously adopt the terms of all national agreements. The district court
concluded that the Railway Commission's position was "not arguable" and,
therefore, the dispute was a "major dispute." See id. at 305-07, 109 S.Ct. at
2481-82 The district court therefore granted the Union's motion to preliminarily
enjoin the Railway Commission from refusing to pay the rate of pay increases
and other adjustments contained in the 1996 national agreement. The Railway
Commission appealed that order to this court.2
II.
A.
24
Cir.1994).
B.
25
The key question at issue in this appeal is whether the parties' dispute is
"major" or "minor" under the RLA. The answer to this question determines
whether the district court had subject-matter jurisdiction to hear the case. See
Consolidated Rail, 491 U.S. at 303-04, 109 S.Ct. at 2480-81 (stating that the
National Railroad Adjustment Board has exclusive jurisdiction to review minor
disputes) (citing 45 U.S.C. 153 First). Because we conclude that the dispute
is a minor one under the RLA, we hold that the district court lacked subjectmatter jurisdiction to issue the preliminary injunction.
26
The RLA does not explicitly use the terms "major dispute" or "minor dispute."
Rather, these are terms adopted by the courts from the vocabulary of railroad
management and labor as a shorthand method of describing two classes of
controversies Congress had distinguished in the RLA. As we will explain more
fully below, "major disputes" seek to create contractual rights, while "minor
disputes" seek to enforce those rights. See id. at 302, 109 S.Ct. at 2479.
27
The statutory basis of the major dispute category is found in 2 Seventh and
6 of the RLA, 45 U.S.C. 152 Seventh and 156. The former states that "No
carrier, its officers or agents shall change the rates of pay, rules, or working
conditions of its employees, as a class as embodied in agreements except in the
manner prescribed in such agreements" or through the mediation procedures
established in RLA 6. See Consolidated Rail, 491 U.S. at 302, 109 S.Ct. at
2479. When a major dispute arises, the RLA requires the parties to undergo a
lengthy process of bargaining and mediation. 45 U.S.C. 155 and 156. Until
they have exhausted those procedures, the parties are obligated to maintain the
status quo, and the district courts have subject-matter jurisdiction to enjoin a
violation of the status quo pending the outcome of the procedures. See
Consolidated Rail, 491 U.S. at 302-03, 109 S.Ct at 2479-80.
28
Minor disputes, on the other hand, are based on RLA 2 Sixth and 3 First (i),
45 U.S.C. 152 Sixth and 153 First (i). These sections establish conference
and compulsory arbitration procedures for disputes arising out of "grievances or
out of the interpretation or application of agreements concerning rates of pay,
rules, or working conditions." Id. 152 Sixth. See Consolidated Rail, 491 U.S.
at 303, 109 S.Ct. at 2480. See also Hawaiian Airlines, Inc. v. Norris, 512 U.S.
246, 254-55, 114 S.Ct. 2239, 2244-45, 129 L.Ed.2d 203 (1994) (holding that
"grievances" is merely a synonym for disputes involving the interpretation or
application of collective bargaining agreements). When a minor dispute arises,
The difficulty is, of course, determining whether any given dispute is a major
or minor one. In Consolidated Rail, the Supreme Court addressed the standard
for differentiating between the two, see id. at 300, 109 S.Ct. at 2478 explaining
that major disputes are
30
disputes
over the formation of collective agreements or efforts to secure them. They
arise where there is no such agreement or where it is sought to change the terms of
one, and therefore the issue is not whether an existing agreement controls the
controversy. They look to the acquisition of rights for the future, not to assertion of
rights claimed to have vested in the past.
31
Id. at 302, 109 S.Ct. at 2479 (quoting Elgin, Joliet & E. Ry. Co. v. Burley, 325
U.S. 711, 723, 65 S.Ct. 1282, 1289, 89 L.Ed. 1886 (1945)) (emphasis added).
Minor disputes, on the other hand,
32
contemplate[
] the existence of a collective agreement already concluded or, at any
rate, a situation in which no effort is made to bring about a formal change in terms
or to create a new one. The dispute relates either to the meaning or proper
application of a particular provision ... or to an omitted case.... In either case the
claim is to rights accrued, not merely to have new ones created for the future.
33
Id. at 303, 109 S.Ct. at 2480 (quoting Burley, 325 U.S. at 723, 65 S.Ct. at 1289)
(emphasis added).
34
The Supreme Court concluded that the demarcation between major and minor
disputes is, therefore, neither the importance of the issue nor the likelihood one
party would resort to self-help. Instead, the line drawn is whether one of the
parties asserts that the terms of an existing agreement either establishes or
refutes the presence of a right to take the disputed action. "The distinguishing
feature of such a case is that the dispute may be conclusively resolved by
interpreting the existing agreement." Id. at 305, 109 S.Ct. at 2481 (emphasis
added). In other words, "major disputes seek to create contractual rights, [while]
minor disputes [seek] to enforce them." Id. at 302, 109 S.Ct. at 2479.
35
The test the Supreme Court therefore creates in Consolidated Rail is that "
[w]here [a party] asserts a contractual right to take the contested action, the
ensuing dispute is minor...." Id. at 307, 109 S.Ct. at 2482. However, to prevent
that party's characterization of the dispute from undercutting the RLA's
prohibition against unilateral imposition of contractual terms, the Supreme
Court added that the party's action must be "arguably justified by the terms of
the parties' collective-bargaining agreement. Where, in contrast, the employer's
claims are frivolous or obviously insubstantial, the dispute is major." Id. at 30507, 109 S.Ct. at 2481-82.
36
The Supreme Court stated that the railroad has the burden of establishing the
exclusive arbitral jurisdiction under the RLA (and, consequently, the lack of
jurisdiction in the district court), but added that the railroad's burden is
"relatively light." Id. at 307, 109 S.Ct. at 2482. Relying on this light burden and
the language of the test, this court has concluded that the Consolidated Rail test
is "deliberately tilted toward finding a dispute minor." Railway Labor
Executives Ass'n v. Chesapeake W. Ry., 915 F.2d 116, 119 (4th Cir.1990).
Moreover,
37 district court need not, indeed should not, assess the relative merits of the parties'
[a]
competing interpretations of the contract in order to find the dispute "minor." If the
railroad's assertion that the collective bargaining agreement controls the dispute rises
above the "frivolous or obviously insubstantial," then the court must dismiss the
action for lack of subject matter jurisdiction.
38
Id. Finally, as the Supreme Court noted in Consolidated Rail, although the
union's interpretation could conceivably carry the day in arbitration, that does
not mean that the railroad's contractual interpretation is frivolous or
insubstantial. See Consolidated Rail, 491 U.S. at 317, 109 S.Ct. at 2487.C.
39
Applying the above rules to the facts of this case, we must decide whether the
Railway Commission's position is "arguably justified by the terms of the
parties' collective-bargaining agreement" or, rather, "frivolous or obviously
insubstantial." See Consolidated Rail, 491 U.S. at 305-07, 109 S.Ct. at 2481-82.
The Railway Commission is, of course, trying to characterize the dispute as
minor, to avoid the imposition of the injunction. The Railway Commission
asserts that the dispute turns on the interpretation of the 1973 Agreement,
particularly in light of the parties' "past practice" of enacting standby
agreements. The Union, on the other hand, is trying to characterize the dispute
as major, by asserting it is about adding new terms (those of the new national
agreement) to the 1973 Agreement. At first blush, the Union's characterization
appears to have merit: if the Union's interpretation of the 1973 Agreement
prevails, the terms of the 1996 national agreement would be added to the
parties' 1973 Agreement. Thus, the dispute may appear to be about the creation
The Consolidated Rail Court held that "[t]he distinguishing feature of [a minor
dispute] is that the dispute may be conclusively resolved by interpreting the
existing agreement." Id. at 305, 109 S.Ct. at 2481. Such is the case here. The
obligations and benefits of the parties cannot be determined without first
determining whether the parties incorporated all national agreements into the
1973 Agreement. Incidentally, this determination would also determine what
the status quo currently is. If the 1973 Agreement is interpreted for the Railway
Commission, then the Railway Commission has no duty to provide the new
wage and health benefits. If, however, the 1973 Agreement is interpreted for
the Union, the benefits from the 1996 national agreement would already be a
part of the 1973 Agreement. In either case, no formal changes in the existing
1973 Agreement would be required. See id. at 303, 109 S.Ct. at 2480 (stating
that minor disputes involve no efforts to bring about a formal change in an
agreement or to create a new one).
41
In reality, the district court's decision turned entirely on the interpretation of the
1973 Agreement and standby agreements. The district court examined the
provisions of all these local agreements and the parties' alleged past practices,
and found that the Railway Commission's interpretation was not arguable.
Consequently, the district court concluded that the Railway Commission was
attempting to unilaterally alter the terms of the 1973 Agreement, constituting a
major dispute. This demonstrates that even the district court implicitly
recognized that this dispute was fundamentally about contract interpretation.
However, we believe the district court erred in concluding the Railway
Commission's interpretation was not arguable.
42
Examining the facts of this case, we believe the Railway Commission's position
is "arguably justifiable" in light of the 1973 Agreement and the standby
agreements and, therefore, the Railway Commission has met its light burden of
establishing exclusive arbitral jurisdiction. See id. at 307, 109 S.Ct. at 2482.
First, the 1973 Agreement was entered into at a time when a national
agreement was already in existence, and the 1973 Agreement refers to "the
national agreement." (J.A. 25). Moreover, every standby agreement was
entered into at a time when a national agreement was being negotiated, and
each states that "any settlement ... reached through national handling shall be
44
Moreover, the record clearly shows that the parties used standby agreements
for every subsequent round of national handling. If the 1973 Agreement truly
incorporates all future national agreements, each of these standby agreements
would be superfluous. If, on the other hand, the 1973 Agreement only
incorporated the national agreement in effect at the time, each subsequent
standby agreement would have been necessary in order to adopt subsequent
national agreements. The record clearly shows it was the Union that instigated
adoption of each standby agreement. Although not determinative, these facts
are evidence that the parties' past practice was to incorporate new national
agreements only through standby agreements, rather than automatic
incorporation into the 1973 Agreement. See generally, id. at 311-20, 109 S.Ct.
at 2484-89 (permitting, in appropriate instances, past practices of the parties to
be used as implied terms of their agreement).
45
Next, the first paragraph and the first sentence of the second paragraph of each
standby agreement explains the purpose of the standby agreement:In
accordance with provisions of the Railway Labor Act, as amended, a notice was
served under date of [date differed for each Standby agreement], on practically
all rail-roads in the United States, including [the South Carolina Public Railway
Commission], by the accredited representative of employees of such railroads
who are represented by the United Transportation Union, of a desire to change
existing agreements as set forth in an attachment made part of the aforesaid
notice.
48
Finally, the record shows that the Union has admitted the standby agreements
were the parties' usual practice. When the Union initiated the process leading
up to the 1988 Standby Agreement, the Union's General Chairperson, John W.
Coulter, stated in a letter to the Railway Commission that "[t]he standby
agreement has always been the norm concerning our seniority, work rules and
rates of pay." (J.A. 32). He went on to explain why that was the case: "This
agreement is in alignment with South Carolina State Law 54-3-210 which
provides for our work rules and rates of pay to be'in force relative to like
employees of interstate railroads operating in the same territory with the
terminal railroads authorized hereby.' " (J.A. 32) (emphasis added). In other
words, instead of merely accepting the national agreement, the parties left open
the possibility of agreeing locally to more regional rates and rules.
49
The district court, relying on United Transp. Union v. Gateway W. Ry., No. 95-
This conclusion may well result in a delay of the bargaining process between
the Railway Commission and the Union until the arbitration process has
interpreted the 1973 Agreement and the standby agreements. Nevertheless, the
Supreme Court has explicitly allowed such a consequence to occur. The
Consolidated Rail Court stated:
Consolidated Rail, 491 U.S. at 310 and n. 8, 109 S.Ct. at 2486 n. 8. In the
meantime, the Railway Commission need not pay the increased wage and
health benefits pending resolution of this minor dispute. See id. at 304, 109
S.Ct. at 2480 (stating that the Supreme Court has never recognized in a minordispute situation a statutory obligation on the part of an employer to maintain
the alleged status quo pending the arbitration board's decision).5
III.
53
Because we conclude that the present dispute is a "minor dispute" under the
RLA, we hold that the district court abused its discretion in issuing the
preliminary injunction against the Railway Commission. See McHan, 101 F.3d
at 1040; Manning, 119 F.3d at 263. We therefore vacate the preliminary
injunction and remand with instructions to dismiss the Union's action for lack
Counsel for the Union admitted at oral argument they are seeking to enforce
the existing contract, not to form a new agreement. However, counsel still
characterized the case as a major dispute because the Union was seeking to
maintain the status quo. In so arguing, counsel cited to the Supreme Court's
decision in Detroit & Toledo Shore Line v. United Transportation Union, 396
U.S. 142, 90 S.Ct. 294, 24 L.Ed.2d 325
The Union's argument merely begs the question. If the dispute is a major
dispute, then the parties are obligated to "preserve and maintain unchanged
those actual, objective working conditions and practices, broadly conceived,
which were in effect prior to the time the pending dispute arose and which are
involved in or related to that dispute." See id. at 153, 90 S.Ct. at 300. However,
the Supreme Court has never recognized the obligation to maintain the status
quo during a minor dispute. See Consolidated Rail, 491 U.S. at 304, 109 S.Ct.
at 2480. Thus, "maintaining the status quo " has no meaning until the dispute
has been classified as major or minor.
In other words, we believe the parties would have more naturally stated in
Article 1(a) of 1973 Agreement words to the effect that "Rates of pay will be
governed by those agreed upon by national agreements." (Compare J.A. 25).
Furthermore, in Article 34(a) the parties would have naturally stated that
"National Health and Welfare Agreements to be consummated between the
[parties] ... are a part of this agreement." (Compare J.A. 26)
Because of our disposition of the case on this issue, we need not reach the other
issue the Railway Commission raises in its appeal, namely whether the district
court's injunction deprives the Railway Commission of selecting its own
bargaining representatives